Merkel Faces Struggle on Coalition Talks Even After Her Victory

Photographer: Johannes Eisele/AFP via Getty Images

German Chancellor Angela Merkel is currently holding talks with the opposition Social Democrats and the Greens on forming a coalition government with one of them after her bloc secured the biggest election victory since German reunification in the Sept. 22 federal vote. Close

German Chancellor Angela Merkel is currently holding talks with the opposition Social... Read More

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Photographer: Johannes Eisele/AFP via Getty Images

German Chancellor Angela Merkel is currently holding talks with the opposition Social Democrats and the Greens on forming a coalition government with one of them after her bloc secured the biggest election victory since German reunification in the Sept. 22 federal vote.

Chancellor Angela Merkel will confront a stiffening challenge to form a government this week even after her record election victory as prospective coalition partners raise demands to open official talks.

With the leadership of Germany’s Greens party already casting doubt on negotiations with Merkel’s Christian Democratic-led bloc, the Social Democrats are hardening in their demand for a nationwide minimum wage of 8.50 euros ($11.51) an hour. Merkel’s faction will hold a second round of exploratory talks with the SPD today in Berlin and with the environmental Greens tomorrow.

“It’s clear above all that there won’t be a government with the SPD” without an obligatory minimum wage, SPD General-Secretary Andrea Nahles told Bild am Sonntag in an interview yesterday. “Our members won’t accept anything else.”

The difficulty for Merkel of navigating coalition talks belies winning the biggest election victory since German reunification. The vote three weeks ago put Merkel’s Christian Democratic Union and the Bavarian CSU five seats short of an absolute majority, rendering any negotiating party an overshadowed junior partner.

After CDU, CSU and SPD negotiators met for a three-hour meeting on Oct. 4 to set the tone, the 21 interlocutors are scheduled to reconvene at 4 p.m. today in central Berlin to tackle differences on issues such as labor policy and the European debt crisis.

Taxes, Wages

While SPD Chairman Sigmar Gabriel last week signaled a softening on the party’s demand to raise taxes, the ultimatum on the minimum wage underscores the difficulty of bridging differences. Merkel rejected a statutory minimum wage throughout the campaign, preferring an industry-by-industry approach that allows wages to be set by collective bargaining.

Over the weekend, Merkel reiterated her support for industry-determined wages, showing no hint of compromise.

“The government has introduced branch-specific minimum wages for more than 4 million employees in the last four years,” the chancellor said in a podcast ahead of a speech she’ll give on Oct. 16 to the IG-BCE labor union.

In the Bild interview, the SPD’s Nahles raised the stakes and said today’s meeting should be the deciding moment.

Merkel’s bloc “shouldn’t assume that there will automatically be a third round of exploratory talks,” Nahles said. “We need concrete indications already on Monday on whether entering coalition talks would make sense.”

Terms of a Deal

Still, most signals pointed to the likelihood of an eventual agreement between Merkel and the SPD for a “grand coalition,” reprising a government of the rival factions that Merkel oversaw in her first term between 2005 and 2009.

CDU and CSU party officials were preparing an offer to the SPD that would involve a minimum wage, limits on part-time jobs and higher pensions, Leipziger Volkszeitung reported. In return, the SPD would reject jointly issued euro bonds, the newspaper said, citing unidentified party officials.

Some 52 percent of Germans support a grand coalition, an Emnid poll published in Bild yesterday showed, while only 25 percent back a government with the Greens. Hamburg’s SPD mayor, Olaf Scholz, a party vice-chairman, joined members of his bloc who say that a grand coalition is the best option to confront Germany’s challenges over the coming years.

’’Voters have given us a mandate to make something out of the election result,’’ he told Der Spiegel.

SPD Leverage

The SPD will convene a party meeting of some 200 delegates on Oct. 20 to decide on whether to proceed with any talks. Any coalition agreement that the parties reach in the weeks after would then have to put to an SPD member vote, a prospect that gives the party’s negotiators leverage with Merkel.

The chancellor told lawmakers from her party last week that she wants clarity on coalition building by Oct. 22, the first day that the new lower house, or Bundestag, meets.

While Nahles last month raised the possibility that coalition talks could last until January, Finance Minister Wolfgang Schaeuble, a CDU member, said Germany could have a new government in a about month, sooner than expected.

“We could have a new government around mid-November,” Schaeuble told reporters Oct. 12 in Washington during meetings of the International Monetary Fund and the World Bank.

Meanwhile, Green party leaders expressed skepticism about a coalition with Merkel following exploratory talks between the groups on Oct. 10. Winfried Kretschmann, the Green premier of the southwestern state of Baden-Wuerttemberg, said the next day that such a coalition was “not very likely.”

“It would be an enormous challenge to shoulder,” Kretschmann told reporters after a session of the upper house of parliament, or Bundesrat, Oct. 11. “That’s why I think it’s not very likely that black-green will happen,” he said, using terms for Germany’s color-coded political factions.

Merkel’s CDU/CSU won 311 seats out of 631 in the Bundestag, requiring her to form a coalition to have a majority. The SPD has 193, while the Greens won 63. The anti-capitalist Left Party has 64 seats.

To contact the reporter on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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